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EXHIBIT 10.18
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement (this
"Amendment"), dated as of October 31, 1997, is entered into by and among
NationsBank of Texas, N.A. ("Lender"), Fluid Containment, Inc., Xxxxxx
Containment, Inc., Ershigs, Inc., SEFCO, Inc., GL&V/XxXxxxxx Construction, Inc.
(to be known as Ershigs Biloxi, Inc.) ("Additional Borrower"), Denali
Incorporated, Instrumentation Solutions, Inc., Fluid Containment Property,
Inc., Containment Solutions, Inc., and Specialty Solutions, Inc. Fluid
Containment, Inc., Xxxxxx Containment, Inc., Ershigs, Inc., and SEFCO, Inc. are
each a "Borrower" and, collectively, "Borrowers"; Denali Incorporated,
Instrumentation Solutions, Inc., Fluid Containment Property, Inc., Containment
Solutions, Inc., Specialty Solutions, Inc., and Borrowers are each an "Obligor"
and, collectively, "Obligors".
RECITALS
A. Borrowers and Lender are parties to that certain Loan and
Security Agreement, dated as of October 24, 1997 (the "Loan Agreement").
B. Lender and Borrowers desire to amend the Loan Agreement as
herein set forth, among other things, to add Additional Borrower as a Borrower
under the Loan Agreement.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by all parties, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this
Amendment, to the extent not otherwise defined herein, shall have the same
definitions assigned to such terms in the Loan Agreement, as amended hereby.
ARTICLE II
Amendments to the Loan Agreement
Section 2.01. Amendment of Section 1.1. Section 1.1 of the Loan
Agreement is hereby amended by deleting the definition of "Borrowers" in its
entirety and substituting the following in lieu thereof:
"'Borrowers' means the following (i) FCI, (ii) HCI, (iii)
Ershigs, (iv) SEFCO, (v) XxXxxxxx, (vi) any other Affiliate of FCI,
HCI, Ershigs, SEFCO, or XxXxxxxx added as a 'Borrower' to this
Agreement at the sole discretion of the Lender and upon the
fulfillment of the conditions described in Section 4.4 hereof, and
(vii) the successors and assigns of the foregoing, and 'Borrower'
means any of them."
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Section 2.02. Amendment of Section 1.1. Section 1.1 of the Loan
Agreement is hereby amended by deleting the definition of "Equipment Term Loan"
in its entirety and substituting the following in lieu thereof:
"'Equipment Term Loan' means the Equipment Term Loan-Ershigs,
the Equipment Term Loan-FCI, the Equipment Term Loan-HCI, the
Equipment Term Loan-Sefco, or the Equipment Term Loan-XxXxxxxx and
'Equipment Term Loans' means more than one of such loans."
Section 2.03. Amendment of Section 1.1. Section 1.1 of the Loan
Agreement is hereby amended by deleting the definition of "XxXxxxxx" in its
entirety and substituting the following in lieu thereof:
"'XxXxxxxx' means GL&V/XxXxxxxx Construction, Inc., a
Mississippi corporation, to be known as Ershigs Biloxi, Inc."
Section 2.04. Amendment of Section 1.1. Section 1.1 of the Loan
Agreement is hereby amended by deleting the definition of "Loan" in its
entirety and substituting the following in lieu thereof:
"'Loan' means any Revolving Credit Loan, any Term Loan, or any
Short Term Loan, as well as all such Loans collectively."
Section 2.05. Amendment of Section 1.1. Section 1.1 of the Loan
Agreement is hereby amended by deleting the definition of "Note" in its
entirety and substituting the following in lieu thereof:
"'Note' means each of the Revolving Credit Notes, the
Equipment Term Notes, Real Estate Term Notes, and the Short Term Loan
Note and 'Notes' means more than one of such notes."
Section 2.06. Amendment of Section 1.1. Section 1.1 of the Loan
Agreement is hereby amended by deleting the definition of "Real Estate Term
Loan" in its entirety and substituting the following in lieu thereof:
"'Real Estate Term Loan' means the Real Estate Term
Loan-Ershigs, the Real Estate Term Loan-FCI, the Real Estate Term
Loan-Sefco, or the Real Estate Term Loan-XxXxxxxx and 'Real Estate
Term Loans' means more than one of such loans."
Section 2.07. Amendment of Section 1.1. Section 1.1 of the Loan
Agreement is hereby amended by adding the following definitions thereto:
"'Equipment Term Loan-XxXxxxxx' means the loan made to
XxXxxxxx pursuant to Section 2B.1(h)."
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"'Real Estate Term Loan-XxXxxxxx' means the loan made to
XxXxxxxx pursuant to Section 2B.1(i)."
"'Short Term Loan' means loan made to the Borrowers pursuant
to Section 2B.1(j)."
"'Short Term Loan Note' means the Short Term Loan Note made by
Borrowers payable to the order of the Lender evidencing the obligation
of Borrowers to pay the aggregate unpaid principal amount of the Short
Term Loan made to them by the Lender (and any promissory note or notes
that may be issued from time to time in substitution, renewal,
extension, replacement or exchange therefor, whether payable to the
Lender or a different lender, whether issued in connection with a
Person becoming a lender after the Funding Date or otherwise), in form
and substance acceptable to Lender."
Section 2.08. Amendment of Section 2B.1(h). Section 2B.1(h) of the
Loan Agreement is hereby deleted in its entirety and the following is
substituted in lieu thereof:
"(h) Equipment Term Loan-XxXxxxxx. Subject to the terms
and conditions hereof, the Lender agrees to lend to XxXxxxxx in a
single advance by October 31, 1997, the amount of $280,000 (the
'Equipment Term Loan- XxXxxxxx'). The Equipment Term Loan-XxXxxxxx
shall be secured by the Collateral and the Real Property and evidenced
by an Equipment Term Note payable to the order of the Lender and duly
and validly executed and delivered by XxXxxxxx. The Equipment Term
Loan-XxXxxxxx is due and payable and shall be repaid in full by
XxXxxxxx in consecutive equal installments of principal of $3,333 on
successive Installment Payment Dates, provided that the final
installment payable on the fifth anniversary of the Funding Date,
shall be in the amount of the then unpaid balance of the Equipment
Term Loan-XxXxxxxx."
Section 2.09. Amendment of Section 2B.1. Section 2B.1 of the Loan
Agreement is hereby amended by adding the following subsections (i) and (j)
thereto:
"(i) Real Estate Term Loan-XxXxxxxx. Subject to the terms
and conditions hereof, the Lender agrees to make a loan to XxXxxxxx in
a single advance by October 31, 1997, in the amount of $675,000 (the
'Real Estate Term Loan-XxXxxxxx'). The Real Estate Term Loan-XxXxxxxx
shall be secured by the Collateral and the Real Property and evidenced
by a Real Estate Term Note payable to the order of the Lender and duly
and validly executed and delivered by XxXxxxxx. The Real Estate Term
Loan-XxXxxxxx is due and payable and shall be repaid in full by
XxXxxxxx in consecutive equal installments of principal of $5,625 on
successive Installment Payment Dates, provided that the final
installment payable on the fifth anniversary of the Funding Date,
shall be in the amount of the then unpaid balance of the Real Estate
Term Loan-XxXxxxxx.
"(j) Short Term Loan. Subject to the terms and conditions
hereof, the Lender agrees to make a loan to Borrowers in a single
advance on October 31, 1997, in the amount of $500,000 (the 'Short
Term Loan'). The Short Term Loan shall be secured by
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the Collateral and the Real Property and evidenced by the Short Term
Loan Note payable to the order of the Lender and duly and validly
executed and delivered by the Borrowers. The Short Term Loan is due
and payable and shall be repaid in full by the Borrowers as follows:
(i) on or before November 14, 1997, an amount equal to
the greater of (A) $200,000.00 or (B) the amount
payable to Ershigs pursuant to Section 1(d) of that
certain Stock Purchase Agreement, dated as of
September, 1997, among GL&V/XxXxxxxx Industries,
Inc., GL&V/XxXxxxxx Construction, Inc., and Ershigs;
(ii) equal monthly installments of $50,000.00 each
thereafter, the first such installment being due on
the first day of December, 1997, and succeeding
installments being due on the same date of each
successive month thereafter; and
(iii) a final installment of all unpaid principal due on
April 30, 1998.
Borrowers will, jointly and severally, pay interest on the unpaid
principal amount of the Short Term Loan at a rate per annum equal to
the lesser of (A) the Maximum Rate, or (B) the sum of one percent
(1.0%) plus the Prime Rate, payable monthly in arrears on each
Interest Payment Date and on April 30, 1998. Interest on the Short
Term Loan shall be computed on the basis of a year of 360 days and the
actual number of days elapsed; provided, however, any calculation of
the Maximum Rate shall be computed on the basis of the actual days
elapsed in a year of 365 or 366 days, as appropriate, unless the Texas
Credit Title permits any applicable interest rate ceiling to be
calculated on the basis of a 360-day year and twelve 30-day months.
The Lender is hereby authorized to record each repayment of principal
of the Short Term Loans in its books and records, such books and
records constituting prima facie evidence of the accuracy of the
information contained therein."
Section 2.10. Amendment of Section 10.1(b). Section 10.1(b) of the
Loan Agreement is hereby amended by deleting subsection (iv) therefrom and
substituting the following in lieu thereof:
"(iv) Permit the Tangible Net Worth of SEFCO at any time:
(A) from the Funding Date to and
including December 31, 1997, to be less than
$2,336,000;
(B) from January 1, 1998, to and
including December 31, 1998, to be less than
$2,632,000; and
(C) from and after January 1, 1999, to
be less than $2,928,000."
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Section 2.11. Amendment of Section 10.1(b). Section 10.1(b) of the
Loan Agreement is hereby amended by adding the following subsection (v)
thereto:
"(v) Permit the Tangible Net Worth of XxXxxxxx at any
time:
(A) from the Funding Date to and
including December 31, 1997, to be less than
$2,861,000;
(B) from January 1, 1998, to and
including June 30, 1998, to be less than $2,917,000;
(C) from July 1, 1998, to and including
December 31, 1998, to be less than $3,055,000; and
(D) from and after January 1, 1999, to
be less than $3,193,000."
Section 2.12. Amendment of Section 10.1(d). Section 10.1(d) of the
Loan Agreement is hereby amended by adding the following subsection (vi)
thereto:
"(vi) Permit XxXxxxxx for any fiscal quarter to have net
income less than $0 for such fiscal quarter."
Section 2.13. Amendment of Section 10.14. Section 10.14 of the
Loan Agreement is hereby deleted in its entirety and the following is
substituted in lieu thereof:
"Section 10.14 Minimum Availability. Permit Availability to
be less than (i) $1,000,000 in the aggregate from the Funding Date to
the earlier of (a) the date the PraxAir Debt is paid in full or (b)
the date the Short Term Note is paid in full or (ii) $1,500,000 in the
aggregate at any time thereafter."
Section 2.14. Amendment of Section 12.1(b). Section 12.1(b) of the
Loan Agreement is hereby amended by adding the following address thereto:
"If to XxXxxxxx
Ershigs Biloxi, Inc.
0000 Xxxx Xxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile No.: 000-000-0000"
Section 2.15. Amendment of Schedules. Schedule 5.1(a), Schedule
5.1(h), Schedule 5.1(i), Schedule 5.1(o), Schedule 5.1(t), Schedule 5.1(u),
Schedule 5.1(v), and Schedule 5.1(w) to the Loan Agreement are hereby deleted
in their entirety and the attached Schedule 5.1(a), Schedule 5.1(h), Schedule
5.1(i), Schedule 5.1(o), Schedule 5.1(t), Schedule 5.1(u), Schedule 5.1(v), and
Schedule 5.1(w), are substituted in lieu thereof, respectively.
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Section 2.16. Amendment of Schedules. Schedule 5.1(b), Schedule
5.1(e), Schedule 5.1(f), Schedule 5.1(g), and Schedule 5.1(j), to the Loan
Agreement are hereby amended by adding thereto the attached Schedule 5.1(b),
Schedule 5.1(e), Schedule 5.1(f), Schedule 5.1(g), and Schedule 5.1(j),
respectively.
Section 2.17. Amendment of Exhibit E. Exhibit E to the Loan
Agreement is hereby amended by adding the following property locations thereto:
"200 0xx Xxxxxx, Xxxxxx, Xxxxxxxxxxx 00000"
ARTICLE III
Conditions Precedent
Section 3.01. Conditions Precedent. The effectiveness of this
Amendment is subject to the condition precedent that Lender shall have received
(or waived receipt of) the following, each duly executed and delivered and in
form and substance and dated as of a date satisfactory to Lender and its legal
counsel, or that the following shall be fulfilled, as the case may be:
(a) All conditions set forth in Sections 4.3 and 4.4 of
the Loan Agreement shall have been satisfied; and
(b) Lender shall have executed this Amendment.
ARTICLE IV
Ratifications, Representations, and Warranties
Section 4.01. Ratifications by Borrowers. The terms and provisions
set forth in this Amendment shall modify and supersede all inconsistent terms
and provisions set forth in the Loan Agreement and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the Loan
Agreement are ratified and confirmed and shall continue in full force and
effect. The Loan Agreement as amended by this Amendment shall continue to be
legal, valid, binding and enforceable in accordance with its terms.
Section 4.02. Renewal and Extension of Security Interests, Pledges,
and Assignments. Each Obligor hereby renews and affirms the liens and security
interests created and granted in the Loan Agreement and all other Loan
Documents. Each Obligor agrees that this Amendment shall in no manner affect
or impair the liens and security interests securing the Secured Obligations,
including, without limitation, all Secured Obligations of Additional Borrower
and that such liens and security interests shall not in any manner be waived,
the purposes of this Amendment being to modify the Loan Agreement as herein
provided, and to carry forward all liens and security interests securing same,
which are acknowledged by each Obligor to be valid and subsisting.
Section 4.03. Ratification by Guarantors. Each Obligor executed or
otherwise agreed to be bound by an Unconditional Guaranty, dated as of October
24, 1997 (as amended or otherwise
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modified, the "Guaranty") for the benefit of Lender. Each Obligor hereby (i)
ratifies and confirms the terms and conditions of the Guaranty, (ii) agrees
that the Guaranty is and shall continue in full force and effect for the
benefit of Lender, (iii) agrees that neither this Amendment nor the
transactions contemplated hereby shall in any manner affect or impair the
Guaranty, and (iv) agrees that "Guaranteed Debt" shall include all Secured
Obligations of Additional Borrower.
Section 4.04. Ratification by Subordinated Lenders. Each Borrower
executed or otherwise agreed to be bound by a Subordination Agreement, dated as
of October 24, 1997 (as amended or otherwise modified, the "Subordination
Agreement") for the benefit of Lender. Each Borrower hereby (i) ratifies and
confirms the terms and conditions of the Subordination Agreement, (ii) agrees
that the Subordination Agreement is and shall continue to be in full force and
effect for the benefit of Lender, (iii) agrees that neither this Amendment nor
the transactions contemplated hereby shall in any manner affect or impair the
Subordination Agreement, and (iv) agrees that Additional Borrower shall be a
"Borrower" under the Subordination Agreement and that any obligations of
Additional Borrower to such Borrower shall be Subordinated Debt thereunder.
Section 4.05. Ratifications by Additional Borrower.
(a) Additional Borrower hereby agrees that it is bound by
all of the conditions and requirements of the Loan Agreement as fully
as if it had executed the Loan Agreement, as amended hereby, as a
"Borrower" on October 24, 1997, and assumes all of the duties and
obligations of a Borrower, whether joint, several, or joint and
several, under the Loan Agreement.
(b) Additional Borrower hereby agrees that (i) it is a
"Guarantor" under the Guaranty, a "Subordinated Creditor" under the
Subordination Agreement, and a "Contributor" under the Contribution
Agreement, (ii) it is bound by all of the agreements, conditions,
requirements, and waivers in each of the Guaranty, Subordination
Agreement, and Contribution Agreement, and (iii) it absolutely and
unconditionally guarantees, with all other Guarantors, jointly and
severally, the Guaranteed Debt pursuant to the terms of the Guaranty.
(c) To secure the payment, observance and performance of
all Secured Obligations, Additional Borrower hereby mortgages, pledges
and assigns all of the Collateral to the Lender for itself and as
agent for any Affiliate of the Lender and grants to the Lender for
itself and as agent for any Affiliate of the Lender a continuing
security interest in, and a continuing Lien upon, all of Additional
Borrower's right, title and interest in and to the Collateral.
(d) As additional security for all of the Secured
Obligations, Additional Borrower grants to the Lender for itself and
as agent for any Affiliate of the Lender a security interest in, and
assigns to the Lender for itself and as agent for any Affiliate of the
Lender all of Additional Borrower's right, title and interest in and
to, any deposits or
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other sums at any time credited by or due from the Lender and each
Affiliate of the Lender to Additional Borrower, with the same rights
therein as if the deposits or other sums were credited by or due from
the Lender.
Section 4.06. Representations and Warranties. Each Borrower and
the Additional Borrower represent and warrant to Lender as follows: (i) the
execution, delivery and performance of this Amendment and any and all other
Loan Documents executed and/or delivered in connection herewith have been
authorized by all requisite corporate action on the part of each Borrower and
the Additional Borrower and will not violate the articles of incorporation or
bylaws of any Borrower or the Additional Borrower or any agreement to which any
Borrower or the Additional Borrower is a party; (ii) the representations and
warranties contained in the Loan Agreement and any other Loan Document are true
and correct on and as of the date hereof as though made on and as of the date
hereof; and (iii) no Default or Event of Default under the Loan Agreement has
occurred and is continuing.
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All
representations and warranties made in the Loan Agreement or any other Loan
Document, including without limitation, any Loan Document furnished in
connection with this Amendment, shall survive the execution and delivery of
this Amendment and the other Loan Documents, and no investigation by Lender or
any closing shall affect such representations and warranties or the right of
Lender to rely thereon.
Section 5.02. Reference to Loan Agreement. Each of the Loan
Documents, including the Loan Agreement and any and all other agreements,
documents or instruments now or hereafter executed and delivered pursuant to
the terms hereof or pursuant to the terms of the Loan Agreement as amended
hereby, are hereby amended so that any reference in such Loan Documents to the
Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.
Section 5.03. Expenses of Lender. Borrowers and Additional
Borrower agree, jointly and severally, to pay on demand all costs and expenses
incurred by Lender in connection with the preparation, negotiation and
execution of this Amendment and the other Loan Documents executed pursuant
hereto and any and all amendments, modifications, and supplements thereto,
including, without limitation, the costs and fees of Lender's legal counsel,
and all costs and expenses incurred by Lender in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any other Loan Document, including, without limitation, the
reasonable costs and fees of Lender's legal counsel.
Section 5.04. Severability. Any provision of this Amendment held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable.
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SECTION 5.05. APPLICABLE LAW. THIS AMENDMENT SHALL BE DEEMED TO
HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ITS
CONFLICTS OF LAWS PRINCIPLES.
Section 5.06. Successors and Assigns. This Amendment is binding
upon and shall inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, executors, and legal representatives, except that
none of the parties hereto other than Lender may assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.
Section 5.07. Counterparts. This Amendment may be executed in one
or more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.
Section 5.08. Headings. The headings, captions, and arrangements
used in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
SECTION 5.09. ENTIRE AGREEMENT. THE LOAN AGREEMENT AS AMENDED BY
THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED IN
CONNECTION WITH AND PURSUANT TO THIS AMENDMENT AND THE LOAN AGREEMENT REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first written above.
NationsBank of Texas, N.A.
By: /s/ XXXXX XXXXXXXX
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
Fluid Containment, Inc.
By: /s/ XXXXXX X. XXXXXXXXX
-----------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Assistant Secretary
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Xxxxxx Containment, Inc.
By: /s/ XXXXXX X. XXXXXXXXX
-----------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Assistant Secretary
Ershigs, Inc.
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: Treasurer
SEFCO, Inc.
By: /s/ XXXXXX X. XXXXXXXXX
-----------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Assistant Secretary
GL&V/XxXxxxxx Construction, Inc. (to be
known as Ershigs Biloxi,Inc.)
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: Treasurer
Denali Incorporated
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: Treasurer
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Instrumentation Solutions, Inc.
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: Treasurer
Fluid Containment Property, Inc.
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: Treasurer
Containment Solutions, Inc.
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: Treasurer
Specialty Solutions, Inc.
By: /s/ R. XXXXX XXXXXXX
-----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: Treasurer
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 11
